Overview
- The IMF cut its 2026 global growth forecast to about 3.0 percent and raised 2026 headline inflation to roughly 4.7 percent, citing an energy shock from the Middle East that is only partly offset by strong AI-driven investment.
- The IMF marginally pared India’s FY27 growth forecast to 6.4 percent while the ADB lowered its FY27 estimate to 6.6 percent and raised India’s FY27 inflation outlook to about 5.2 percent because higher fuel and transport costs are weighing on household incomes.
- For Pakistan the IMF kept its FY2026-27 growth forecast at 3.5 percent while the ADB reported FY26 growth at 3.7 percent and raised inflation forecasts sharply to around 7.2 percent for FY26 and 8.3 percent for FY27, reflecting rising food and fuel prices.
- Multilateral forecasters say the shock transmits quickly because about one-fifth of global oil and LNG flowed through the Strait of Hormuz before the fighting, inventories have been drawn down, and the IMF’s baseline assumes the strait begins to reopen in mid-July with full normalcy by March 2027.
- Officials warn that renewed escalation or further shipping disruptions would push oil prices and inflation higher, tighten financial conditions, and force deeper downgrades, while concentrated AI and tech investment in some economies so far cushions the near‑term hit.